Briefing: Environmental liability - Should you be worried about the EC Environmental Liability Directive?

(From Reinsurance)

Traditionally, European environmental liability has only covered personal injury and property damage, but now all that has changed. The implementation of the European Community Environmental Liability Directive (EC ELD) will see the introduction of statutory liability for damage to nature in Europe. By 30 April 2007 at the latest, the EU's 27 member states must have introduced the 'polluter pays' principle for environmental damage.

What this means in practice is that, should any damage to the environment occur after that date, the competent authority must compel the polluter to restore the object of the damage to its natural condition - in other words, its condition before the damage occurred. 'Environmental damage' is defined in the directive as any damage to water resources, land, protected flora and fauna species, and certain natural habitats.

The directive introduces strict liability for many commercial activities that affect the environment. For all other activities not listed in the directive, liability based on fault will apply, thus covering protected species and natural habitats for the first time. The objective is to establish a common framework for dealing with public-law claims.

Once the directive has been implemented, it will be superimposed on previous liability systems under public and civil law for damage to land and water.

Practical implications

What are the practical implications? New environmental damage cases will also bring past pollution to light, and it is likely that the polluter, if it can be traced, or the current owner of the property (which may not have been responsible for causing the pollution) will be held responsible. Many known cases of pollution have so far not been remedied, because either the costs are too high or the polluter has not been traced.